Today, K-Town is one of the main business areas of Los Angeles. The economic development of K-Town stimulates a considerable economic growth in Los Angeles as well as in the USA at large. In this respect, it is necessary to lay emphasis on the fact that K-Town may be viewed as a model of the development of the USA, since LA’s authorities has managed to create favorable conditions for the socioeconomic development in K-Town. In this regard, the launch of the smart-growth policy played probably the determinant role in the rapid economic development of K-Town and showed Los Angeles the advantages of the liberalization of fiscal policies and stimulation of foreign direct investments in the local economy.
At the same, today, K-Town may be viewed as a kind of bridge which links LA as well as the US at large with foreign investors, especially those investors which operate in Asia, including South Korea, Japan and other countries. Since the 1980s the interest of foreign investors to K-Town have been growing steadily and, in such a way, the experience of K-Town could be successfully implied in other regions of the US, stimulating international economic cooperation of the USA with foreign companies.
On the other hand, the impact of K-Town on the American economy cannot be limited by the development of activities solely. In fact, it has a positive impact on the development of socioeconomic situation in the area, in LA and even in the USA because the economic development of K-Town proved to be highly efficient leading to a considerable decrease of unemployment rates. In such a way, the economic development of K-Town had a positive impact on the economy of the US since K-Town could be used as a model of the economic development of the entire country, while liberalization of local fiscal and business policies stimulated the growth of local economy and attracted foreign investorsÂ who could develop their business nationwide and, what is probably even more important, the ballooning K-Town’s economy contributed to the improvement of the socioeconomic situation in the area and revealed the ways to the solution of such problems as unemployment and integration of immigrants in socioeconomic life of the country.
K-Town and foreign investments
Historically, K-Town developed as an essential part of Los Angeles since the area was located practically in the heart of the city. At the same time, the economic development of K-Town was quite slow until the 1980s. In this respect, it is important to stress a huge impact of the restrictive legislation, especially in the fiscal sphere, which limited the opportunities to develop business in K-Town. For instance, there were consistent restrictions on the construction of new buildings, especially if they did not meet the local architectural standards and were too high or to modern to meet the standards based on the architecture of existing buildings. As a result, investors were not willing to develop their business in the area because they considered K-Town was not prospective in terms of the future growth.
At this point, it should be said that, as a rule, the development of business, especially in the field of entertainment, restoration, leisure and recreation industry, implies the possibility to enlarge facilities and develop the local infrastructure. However, the existing restrictive legislation and fiscal policies discouraged investors to develop their business in K-Town. As a result, the local economy had undergone a profound recession and crisis by the middle of the 1970s, while the upcoming crisis of the early 1980s, which struck the USA, forced the local authorities to undertake efficient steps to stimulate the economic development of the area and, thus, prevent the repetition of the economic recession of the mid-1970s.
In terms of the reforms introduced by the LA’s authorities, the local legislation and fiscal policies were changed to attract more foreign investments. In this respect, it should be said that the LA’s authorities focused on foreign investors because it was obvious that the national economy can hardly raise considerable funds for the investment in the development of K-Town because the US economy was stagnating in the early 1980s. At the same time, the local Korean community was very strong and influential in K-Town, but what was even more important for the local as well as national economy, the local community maintained contacts with South Korea. At this point, it is worth mentioning the fact that at the epoch the Korean economy was boosting and since the late 1960s the South Korean economy had been growing at unparalleled pace, while by the 1980s many Korean companies had focused on the search of new markets abroad, where they could develop their business. In such a situation, they naturally were more concerned with investments in the areas where the role of the Korean community was significant since the presence of the Korean community could facilitate the process of entering new markets and development of business abroad because Korean companies could use representatives of Korean communities for the development of their business in a foreign country. The similarly of mentality and cultural identity of South Koreans and American-Koreans living in K-Town created almost perfect conditions for the foreign direct investment from South Korea to the USA, namely to K-Town.
In such a context, the decision of the LA’s authority to facilitate the development of business by foreigners in K-Town opened the way to a new, huge wave of South Korean investments into the local economy. At the epoch, the investments from South Korean companies constituted the lion share of foreign direct investments into the K-Town’s economy. In such a way, K-Town became a bridge between South Korea and the USA, which linked the South Korean capital and American labor force and existing facilities for the development of business in the area (Clarke, 16). In other words, K-Town became the major, target investment area for foreign direct investments from South Korea.
Taking into consideration the economic recession in the 1980s in the USA, the growth of foreign direct investments proved to be crucial for the successful overcoming the economic recession in K-Town and LA. In fact, at the epoch of scarce financial resources, South Korean and other foreign investments allowed K-Town and LA to overcome the crisis and stimulate the economic development of the region. In this respect, it should be said that the experience of K-Town was very important for the USA at the epoch because the success of K-Town revealed the fact that direct foreign investments from such countries as South Korea as well as other countries of the world can assist consistently to the national economy and maintain its stability when it face a risk of crisis or economic recession.
Remarkably, the late 1980s and the 1990s were characterized be a considerable growth of foreign direct investments in the USA and the growing economic cooperation between the USA and other countries (Clarke, 16). In fact, that epoch became the epoch of the emergence of globalization while K-Town was practically a precursor of the trend to globalization. At the same time, it should be said that direct foreign investments still remain a considerable source of the development of local economy and it is due to K-Town LA still draws attention of foreign investors who are ready to invest their money into the development of such a reliable area as K-Town, which has an extensive experience of an effective business development on the basis of foreign investments. Moreover, the large number of satisfied foreign investors encourages other foreigners to keep investing into K-Town and the USA at large. In such a context, it is possible to speak about K-Town as a zone through which foreign investments, especially from South Korea and Asia, are dispersed nationwide.
Smart-growth as accelerator of the economic development
However, the potential of foreign investments could not fully satisfy the needs of the local economy since the growth of population (K-Town is one of most densely populated areas in the USA) and the economic development contributed to the increased needs in the investments, which could not be covered with the help of foreign investments solely. It is worth mentioning the fact that the similar trend could be observed nationwide, especially after 9/11 when the US financial market and economy faced the problem of the lack of confidence from the part of foreign investors, who were uncertain in prospects of their investments in the country, which was a subject of terror attacks. In such a situation, the decision of the LA’s authority to launch the policy of smart-growth in K-Town proved to be an efficient solution of the problem of the economic slowdown and financial crisis (Friedman, 210).
In actuality, the smart-growth implied a series of changes in the economic and fiscal policies in K-Town. To put it more precisely, the local authorities decided to liberalize the local legislation and fiscal policies in order to stimulate business activities in K-Town. In terms of such liberalization of economic and fiscal policies many fiscal and legal restrictions were removed, including many of the parking, low-housing, bed, pollution, tourists and new construction taxes that used to placed considerable restrictions on any development and growth in the area. Due to the introduction of such measures in the early 2000s, K-Town benefited from the fast and substantial economic growth, due to the activation of business in the area (Zaleska, Gratton & M. Bleackley, 122). In such a way, K-Town proved that the liberalization of fiscal policies and stimulation of business activities can produce a positive effect on the development of local economy and this experience could be potentially used at the national level. In addition, K-Town became the fast growing area which still remained attracting for foreign investors, unlike many other parts of the USA, which preserved restrictive fiscal and economic policies.
Socioeconomic effects of K-Town
At the same time, K-Town played an important role in the socioeconomic development of LA and its experience is very useful for the USA because, today, problems which K-Town have practically solved, are still irresolvable for the federal government. In this respect, it is worth mentioning two problems, which undermined socioeconomic stability in K-Town and threaten to the current socioeconomic situation in the USA: immigration and unemployment.
Historically, K-Town was the region where the immigrant population dominated. At the same time, K-Town managed to overcome the numerous socioeconomic problems of immigrants due to the provision of ample business opportunities for the development of small businesses. In this respect, the solution of the problem of unemployment was also very significant for the prevention of numerous socioeconomic problems the immigrant population could have faced in K-Town as it did in other regions of the USA, such as low-income, crimes, etc.
The problem of unemployment was successfully solved due to the economic growth of K-Tow, foreign investments and favorable conditions for the development of business in the area. In such a way, K-Town proved the fact that the economic development can provide ample opportunities for the solution of such economic problems as high unemployment rates.
Thus, taking into account all above mentioned, it is possible to conclude that the economic development of K-Town produced a profound impact on the economic development of LA and the USA at large. The growth of foreign investments and stimulation of local business activities allowed K-Town to overcome numerous economic and social problems. At the same time, K-Town’s experience proved to be very helpful for the USA and showed the way of the development for the entire country. In such a way, K-Town was a kind of area where new economic approaches were tested.